Union Square Café forced out by rising rent

Union Square Café, a Manhattan mainstay on East 16th Street for nearly 30 years, will be forced to relocate after the end of next year as a result of rising rents. The restaurant became the foundation for the empire of Danny Meyer, one of the most successful restaurateurs in the country.

21 Responses

Are you kidding me? That is criminal! USC isn’t very far from what was formerly Bobby Flay’s Mesa Grill over on 5th. Based upon Bobby Flay’s recent Tweet: “A note to NY landlords. Good restaurants are closing all over the city because the rents are impossible to pay. Stop turning NYC into a mall,” I wonder if he was a victim of the same conditions? Lunch at USC’s bar is one of my favorite ways to enjoy an afternoon in NYC and this news really makes me sad.

Victor, I think she’s suggesting that the “market” is getting out of hand. If even highly successful restaurateurs like Danny Meyer and Bobby Flay find that, in the words of Jimmy McMillan, “the rent is too damn high”, perhaps it is.

Just because someone might be willing to pay the asking price does not necessarily mean that’s “what the market will bear”, if I’m getting the expression right. There’s always going to be someone with more money than sense, especially in NYC, large swaths of which are becoming (or have already become) the exclusive playgrounds of the rich.

So Tim, you’re saying if I’m currently charging $10,000 a month in rent, and I could get $15,000 in rent, I should keep it at $10,000? Since there’s always going to be someone willing to pay more, I should keep the rent below-market.

Well John, you can always sell to the highest bidder, but at the end of the day it comes to down to what type of businessman you’d like to be and what type of community you would like to create. In the restaurant industry, in highly desired locations, chain restaurants will almost always be able to outbid a small, local restaurant. I guess the question bears asking if you’d rather be very rich surrounded by strip malls and chain restaurants or make slightly less and have a more diverse community supported by local businesses?

This is an all-to-common problem in NYC. Union Sqare Cafe’ is just a recent addition to the long list of iconic restaurants displaced by increased rents over he years. Even in NYC there is only so many seats that can be turned only so many times in a day. A sidebar: a friend of mine used to work there in the 90′s and she claims Danny Meyer was one of the nicest people she even knew; he’s also one of the smartest restaurateurs in the business…I’m sure he’ll do just fine…but it still sucks to have to relocate.

Sorry but blaming greedy landlords is all too common practice when restaurants decide to shutter there doors. From Steve Cuozzo’s piece below.

“Building owner Ari Ellis wouldn’t tell us the current rent, either.
But the restaurant-loving landlord — whose other eatery tenants include USC’s neighbor Bluewater Grill — did say, “I thought Union Square Cafe was gone even before negotiation started. I couldn’t even get them to give me a number at which they’d renew,” Ellis said. ”

Not the case with Union Square Cafe’ but a lot of buildings in Manhattan (especially high-rise buildings) are owned by large investment groups and operated by management companies (some require several investment groups and multiple management companies in one property). By nature, they tend to be strictly bottom-line motivated (investors expect ROI). I often wondered how any restaurant could ever afford to cover the rent in some areas of NYC. It’s been explained to me that some restaurants get sweet-heart leases because the landlord (or investment group and/or management company) beleive a good restaurant enhances the value of the building, thus making the rest of the building more desirable (which means greater occupancy and hirer rents…you give a little and get back a lot). Sometimes that stategy works, sometimes it doesn’t…it’s all arithmetic.

Restaurant Geek – you raise a great point, its very true. Landlords will often cut sweet deals for good restaurants because the restaurants add cache to the building. Having a place like USC in the building is a huge bonus and makes the rest of the building that much more attractive. Restaurateurs cry the lease blues too often when they are forced to shut down, it takes any blame off of them and creates sympathy, which clearly has happened here. Nobody wants to lose USC as tenant, trust me.

And let’s not portray Meyer as some helpless restaurateur fighting investment firms and real estate developers. He has many investment firms as backers in his restaurants and the long lines at Shake Shacks in NYC are driven by the big banks. He’s not a victim of greed, he’s profited from it for a long time.

The point is the restaurant is going nowhere but someplace else in the city i.e. the taxes in NYC are irrelevant to the discussion, no one is leaving the state, and people receiving public assistance have zero to do with what one group of millionaires choose to do to another group of millionaires.